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Minoan considers travel and leisure spin-off

Scottish travel group Minoan is continuing talks with potential collaborators amid reports that its plans for a new resort in Crete have been approved.

However, the parent company of travel agencies Stewart Travel, John Semple Travel and King World Travel revealed that it was considering a possible spin-off of its travel and leisure division.

Greek Media has reported the dismissal of appeals against a presidential decree approving the development in Crete.

If confirmed, this will be a “transformational event” for the company.

The company said: “Discussions continue with various potential partners including, hotel operators, joint venture partners, financiers and investors to consider the best route for the project to deliver maximum value for shareholders.”

Minoan chairman, Christopher Egleton, said: “On the assumption that the reports in the Greek media are correct, the next 12 months are likely to the most value enhancing in the group’s history.”

The travel and leisure arm delivered earnings [EBITDA] of £715,000 despite the negative impact of the Brexit vote “which caused an immediate and significant short term drop in business, exacerbated by a 50% drop in Turkish travel following terrorist activity”.

The division’s operating profit fell to £272,000 from £387,000 in the previous 12 months due to an increased depreciation charge.

The group reported total group transaction value up by over 11% to £67.8 million in the year to October 31, 2016 from £60.9 million in the previous 12 months.

Gross profits increased by 8% to more than £7 million from £6.5 million but operating losses increased by £247,000 to £788,000.

“The cost increase and consequent decrease in operating profit is in line with the group’s plan and is, in the main, a function of investing for growth in travel and leisure,” Minoan said.

This has been followed up by a strong start to the current year with commission earned up by 16%.

Egleton said: “In respect of travel and leisure, I have noted that the levels of organic growth remain healthy.

“However, in order to achieve major stepped growth in this division through acquisition, the board will continue to work with advisors in considering the possibility of a separation of travel and leisure from the rest of the group as well as other solutions.”

He added: “The delays suffered in Greece have also adversely affected the growth of travel and leisure where, for the past few years we have not been able to acquire a number of businesses, for fear of creating unnecessary dilution in the value per share expected from the [Crete] project.”

The company holds its annual meeting in London on April 27.

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